Correlation Between STMicroelectronics and Fiducial Office
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Fiducial Office at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining STMicroelectronics and Fiducial Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Fiducial Office Solutions, you can compare the effects of market volatilities on STMicroelectronics and Fiducial Office and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in STMicroelectronics with a short position of Fiducial Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Fiducial Office.
Diversification Opportunities for STMicroelectronics and Fiducial Office
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and Fiducial is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Fiducial Office Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiducial Office Solutions and STMicroelectronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on STMicroelectronics NV are associated (or correlated) with Fiducial Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiducial Office Solutions has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Fiducial Office go up and down completely randomly.
Pair Corralation between STMicroelectronics and Fiducial Office
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Fiducial Office. In addition to that, STMicroelectronics is 5.55 times more volatile than Fiducial Office Solutions. It trades about -0.12 of its total potential returns per unit of risk. Fiducial Office Solutions is currently generating about 0.04 per unit of volatility. If you would invest 2,729 in Fiducial Office Solutions on September 1, 2024 and sell it today you would earn a total of 71.00 from holding Fiducial Office Solutions or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Fiducial Office Solutions
Performance |
| Timeline |
| STMicroelectronics |
| Fiducial Office Solutions |
STMicroelectronics and Fiducial Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Fiducial Office
The main advantage of trading using opposite STMicroelectronics and Fiducial Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Fiducial Office can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fiducial Office will offset losses from the drop in Fiducial Office's long position.| STMicroelectronics vs. Hotelim Socit Anonyme | STMicroelectronics vs. Sogeclair SA | STMicroelectronics vs. Axway Software | STMicroelectronics vs. Sidetrade |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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